What Joyce was up against

In all the commentary about Qantas, a number of persons, some of whom should know better (including that stockbroking nit-wit who talks to Jon Faine – great advertising, if you can get it) have accused Alan Joyce of doing the wrong thing by locking out the workers in October 2011.

This is just a flavour of what he was up against (the outlined events occurred between 13 April 2011 and 29 October 2011) :

Union (ALAEA) notifies Qantas of protected industrial action in the form of a one hour stoppage at all Australian ports between 8 am and 9 am;

A single employee, the president of ALAEA, engages in a one hour stoppage;

ALAEA notifies Qantas of protected industrial action in the form of indefinite overtime bans and 2 hour stoppages between 1 am and midday in Melbourne;

Ditto Perth, Brisbane, Adelaide/Darwin on successive days;

ALAEA notifies Qantas of one minute work stoppage for 15 July 2011, overtime bans and a limitation on how work is customarily performed;

AIPA notifies Qantas of protected industrial action by long haul pilots in the form of bans on complying with Qantas’ in-flight announcement policy and performing work in a manner different from that which is customarily performed;

AIPA notifies Qantas of protected industrial action by two long haul pilots in the form of two minute work stoppages;

Pilots start making AIPA endorsed passenger announcements;

One pilot implemented a ban on working days off;

One pilot engages in two, two minute stoppages;

NUW notifies Qantas of national wide 24 hour stoppages;

ALAEA notifies Qantas of one hour stoppages each weekday from 25 August to 16 December;

ALAEA notifies Qantas of protected industrial action in the form of weekend overtime bans;

ALAEA notifies Qantas of full shift stoppages at the heavy maintenance facilities (Avalon and Brisbane)

TWU notifies Qantas of one hour stoppages at 8 am at all major airports;

ALEA calls off four hour work stoppages due to start later that day;

TWU members (baggage handlers and ground crew) engage in two, two hour work stoppages in Melbourne and Sydney;

TWU lodges an application with Fair Work Australia for a good faith bargaining order, claiming Qantas breached good faith obligations by notifying TWU members through a ‘late-night post delivery’ that Qantas would not accept part performance;

TWU rejects Qantas offer of 3% pa pay increase, a 1% increase to superannuation, no forced redundancies for the life of the agreement;

On 29 October 2011, Qantas grounded all its domestic flights with effect from 5 pm and locked out employees (licensed engineers, ground staff and long haul pilots) covered by collective agreements.

So for those of you who think there was some alternative for Joyce, think again. These three unions were effectively waging a (legal) guerilla campaign against Qantas and note that every time there was a stoppage, even for one minute, it was Qantas’ legal requirement to dock the pay of the workers taking the action.

And the reason that Qantas did not take the matters to the tribunal to seek a suspension or termination of protected industrial action – they would have lost.

As the decision read:

It is unlikely that the protected industrial action taken by the three unions, even taken together, is threatening to cause significant damage to the tourism and air transport industries…Protected industrial action is permissible under our system and has been now for many years and has been taken relatively frequently in the airline industry with successive bargaining rounds. In that respect, what we have heard indicates there are still prospects for a satisfactory negotiated outcome in all three cases.

Not sure what else Joyce could have done under the circumstances but it had the intended effect – it broke the rolling strikes the airline had be plagued with and the FWA ordered the unions to immediately cease industrial action. Can’t imagine any other CEO having the balls to take on the unions like Joyce did.
Interestingly, the Flight Attendants union was the only one to back Joyce’s grounding of the fleet.

Well documented Judith. Joyce was left with NO alternative. They were grinding away while Gillard sat back, laughed & fiddled. She didn’t reckon on Joyce not blinking & calling her bluff. Contrary to what every uninformed critic had to say, this short man stood tall & eventually…..it made his day.
Aside from the Conroy attack on Campbell in the Senate C’ttee this week I shall never forget that same chamber when the business illiterate Doug Cameron attempted to give Joyce a lecture on how the airline should be run !

Joyce has done his best against the odds, let it die. Nostalgia and weeping for national icons is of no consequence in the commercial world.

If Qantas was that vital customers would have strongly supported it for the last decade and the unions would have acted more responsibly.

The unions have been at it for long enough and it’s time for their members, much like the car manufacturering workforce, to experience life in the real world competing for supermarket shelf stacking jobs.

There is no role for the Federal government to play and it needs to react as it would if the local hardware store was closing its doors because it couldn’t compete. It would only distort that which should be left to unfold as it will.

Government should not be offering any assistance to the workers – they’ll do well enough under their industrial agreement.

If I recall correctly at least one union secretary was publicly advising travellers not to book with Qantas prior to the shutdown. It was fortunate that the Chairman had the right credentials to advise and back Alan Joyce.

Thanks for the reminder Burke&Wills. Xenophon also acted like a goose:

Senator XENOPHON: Can I ask a couple of questions in relation to the grounding of Qantas last Saturday. As you went into the AGM just a week ago, last Friday, what prospect did you think there would be of a grounding of the fleet that you announced just a day later?

Mr Joyce : I did not. I did not have any view on the prospect of it. What I did is I went into—

Senator XENOPHON: You did not have any view at all?

Mr Joyce : I went into the AGM and, as Leigh Clifford said at the AGM, we had the belief that this could be a watershed moment, because there was a lot of debate and dialogue going around that the unions believed that the management and the board were going to be rolled by the shareholders at the meeting. At that meeting, we had overwhelming support from the shareholders. We had 96 or 97 per cent support for the resolutions of the directors. We thought that that would act as a watershed, as Leigh Clifford said at the time, and it was only when we had commentary that escalated—

Senator XENOPHON: I understand, but—

Mr Joyce : Can I finish the answer, please?

Senator XENOPHON: Please.

Mr Joyce : It was only then when we felt it was escalating and there was talk of 48-hour strikes, talk again of this thing lasting for another year, that I decided on the Saturday to call a board meeting and I made the decision that we were going to ground the airline. I called the board meeting at 10.30. The board meeting took place at 10.30. I got unanimous support from the board. Then, going through the time line, I called the executive committee. This was not planned, because I could not even contact Bruce at the start. Bruce was actually with his architects, planning the building of a house. We had to try and track him down at 12 o’clock to see what was taking place. Then we started the calls and making the decision.

Senator XENOPHON: I am sure my colleagues will ask you more questions. I want to ask a couple of technical questions about that. You received board approval for the decision?

Mr Joyce : No, the decision was a board endorsement. It was my decision.

Senator XENOPHON: So it was your decision, using your management prerogative.

Mr Joyce : Yes.

Senator XENOPHON: What delegated authority do you have from the board to undertake decisions such as this?

Mr Joyce : I have complete operational discretion. I made the decision to ground the A380s when the engine explosion happened a year ago. I made the decision to ground the airline when the volcanic ash occurred. I have complete operational decision making for commercial operation or other reasons. I decided to have a board meeting because of the brand implications and the significant implications around this, to make sure that the board was comfortable with the decision. We had unanimous endorsement from the board.

Senator XENOPHON: I am just trying to understand this. You made a decision on your own—

Senator XENOPHON: Are there any limits to your delegated authority? Is there a monetary limit, for instance? Presumably you cannot decide to buy a dozen A380s as an operational decision, or can you?

Mr Joyce : No, I cannot. There are limitations on capital expenditure.

Senator XENOPHON: What is that imitation?

Mr Joyce : It is $40 million. That is my capital limitation, but on operational issues I have unlimited—

Senator XENOPHON: So, whilst you have to go to the board for anything more than $40 million in capital expenditure, you can make a decision that could cost the airline, for instance, $50 million, $100 million, $200 million? There is no limit to that.

Mr Joyce : Absolutely. On the operational side, I have complete autonomy of what we need to do, because I have to make decisions every day that can cost the company $10 million or $20 million. There are significant operational decisions that are made every day and the board has delegated me that authority to spend what money is needed at any appropriate time. And that is very appropriate for a company that takes safety as its top priority. We want to make sure that I have the complete autonomy to be able to spend what I need when I need in order for that to occur.

Senator XENOPHON: So a momentous decision to ground the entire fleet, to stand down 27,000 employees, was all on your head?

Mr Joyce : That was my decision, absolutely.

CHAIR: I am sorry, Senator Xenophon; now there are a number of senators who want to continue on the same point.

Senator GALLACHER: Mr Joyce, in your CEO’s address to the AGM, you said:

We will protect and grow Australian jobs over the long term.

We will create sustainable value for you, our shareholders.

And we will make Australians proud.

Those were your closing remarks. Can you explain to this committee how your actions on the next day achieved those stated objectives?

Mr Joyce : I can. Let me explain to you my decision-making process on this. I felt that we had three alternatives available to us as a consequence of what was taking place with the industrial action. I could have capitulated to demands that were being asked by three of the unions. My belief—my strong belief—was that those demands were going to endanger the future of the company. This is a company I feel so passionate about. It is a company that I want to make sure is going to survive for the future. The easiest thing I could have done was probably to capitulate, but I thought those demands would have put this company at risk—severely at risk.

Secondly, I could have decided that we continue the way we were going. We had already been in dispute for months. We had already been in a dispute that cost us, as I said at that AGM, $68 million. We had already had 70,000 passengers disrupted. We had already seen hundreds of flights cancelled. We had already seen our forward bookings absolutely collapsing. In every indicator that we had, people were not travelling with us; people had decided that Qantas was not going to be reliable. We had union leaders talking about a slow bake over a year. We had union leaders say, ‘Do not book with Qantas over Christmas.’ We had union leaders saying this could last into the middle or end of next year. So we knew we were losing our customers rapidly, and the $15 million a week that that was costing us meant we were at the verge of a huge crisis in Qantas. We were at a crisis in Qantas and we needed to do something.

The only alternative that was left to me was to bring this to a head, to say, ‘We cannot last another year.’ Therefore the decision was made that we would take, as a consequence of the union action, a lockout of the employees—and it was only the employees that were taking the action and covered by those agreements. We had made it very clear to the rest of the employees that we were going to continue to pay their salaries. We felt that was the only viable way that we could get an agreement that was not going to endanger the future survival of the company.

Why didn’t the multinationals walk away from this Australian shithole earlier? If you didn’t have to be here, you’d be gone in a flash. Collier:

Refusing to replace expired EBAs is a good option for companies that have bargained themselves on to the verge of bankruptcy. When it comes to bargaining, the business almost always loses and the unions almost always win. Sometimes, asking workers to reduce wages and conditions is a step too far; freezing them is more palatable.

Are strikes likely to happen over the wage freeze? Any worker covered by a current EBA is prohibited, by law, from taking industrial action. Any worker who takes part in the action can be sacked without any unfair dismissal redress. Any union that organises “unprotected or unlawful” industrial action for a worker covered by a current EBA can be sued. Only workers covered by expired EBAs can legally take “protected” industrial action after a secret-ballot process that takes about a month.

However, in typical Australian industrial relations style, we have umpteen laws for everything and mostly they are just completely ignored by everyone. So industrial action could happen by anyone at any moment, and if it does Qantas may not necessarily sack the workers or sue the unions. This issue will be the next big industrial relations test for Joyce. Promising a wages freeze is one thing, sacking striking workers and suing unions is another.

The unions will be hatching their plans now. Joyce should do the same.

Australian industrial relations stinks like an overloaded line of dunnies at a summer rock festival.

I think this is a well orchestrated game being played out over time (and with people’s lives). Neither the unions or the airline itself cares two hoots about the individuals, each has a greater goal in mind, and if there is friendly fire casualties then so be it.

I don’t necessarily like Joyce, but I think he’s the fall guy. He has the balls to take the unions on, and he has nothing in Australia to lose. I’d love to see the exit clauses in his contract as I think they’d be doozies…. This isn’t about being liked though, it’s about taking the unions on head to head and breaking the chains of their stranglehold. Reminiscent of the docks in Melbourne… Only way to deal with them is a sledgehammer.

This clown is our No.1 knowall. Thinks he understands everything there is to know about aviation. He is actually a meddling nanny state big government type who sees himself as the industry’s unofficial ombudsman. Just another industrial wrecker like Dick Smith.

Re Tom at 5.43; Collier’s article describes processes that make rapid change very difficult as I read it (other than retrenchment). No doubt there will be a brawl about the selection criteria for retrenchment which may be already set in stone in the EBA’s.

He still caused annoyance and frustration to his customers who paid their fares in all good faith they would get to and from where they were going bar the exceptional problems of weather/malfunction etc.

Did Alan Joyce warn Tony Sheldon in that meeting of 15th October that lockout was on the agenda?

(I’m not pushing a barrel for unions by any means, just looking at it from the point of view of the paying customers who were terribly surprised).

Phil Fry – very true. And, just in time, most people here will have recovered from popcorn over-indulgence during that annihilation of the Liars-greenfilth coalition ‘government’ celebrated in September last year.

Watching the ALP right now is like watching some corrupt criminal apparatchik confessing to his theft and lies in a police sting operation video.

They just do not get it, their previous invulnerability has produced an overweening and overwhelming arrogance in them.

I do not mind Joyce. He’s kept the Jetstar, Qantaslink, and flyers club business units alive and well. What’s killing the Qantas international business unit is legacy issue buildup, a featherbedded union workforce and massive competition by hungry opponents. He’s trying to cut it loose and I think he will succeed.

if he does, he can collapse it to burn away all the dross and deadwood, move it offshore and rebuild it.

I see Mr David Oliver this morning on the Sunrise program was bemoaning the fact that Quantas did not go directly to the work force to discuss the situation, and he claimed they should have, as the workers are the ones who know about the industry and are the real experts etc. I thought that’s exactly what the Toyota company wanted to do with its work force at the Altona, they wanted to talk directly to them! What did the union do there, they bolted up to the Federal Court and sought and got an injunction to prevent Toyota for talking to the workers. Apparently the union officials even gave the Toyota company people the big two fingered salute when leaving after the hearing. It would appear that the union industry is a prosperous one, as there around double union officials today,than in the ‘Hawke’ era where union membership was at an all time high; as compared to all time lowest membership numbers of today.

I was caught out by the shutdown for two important business trips. My alternatives were a return train trip to Sydney from Melbourne over three days instead of one [and enjoyable and relaxing] and a drive to Port Augusta and back [dour days including time on site]. No regrets as Joyce had to take on the unions head to head.

I couldn’t give a continental about his sexual orientation as the little leprechaun has guts and I hope he succeeds. And I got a nice e-mail telling me my 900,000 [no that's not a type] are safe and usable – and they will be.

And I won’t fly “cloth head air” [any of them] out of principle and a small religious problem.

Aside from the Conroy attack on Campbell in the Senate C’ttee this week I shall never forget that same chamber when the business illiterate Doug Cameron attempted to give Joyce a lecture on how the airline should be run…

Re the pork thing, I think that it is also worth mentioning (as my Jewish friends would say) that Jewish people did not pressure Qantas to stop serving pork on their flights. Nor did they (with a very few exceptions) boycott them because there might be pork on board. All they asked was to have an alternative or two on the menu.

Wow. Two Qantas panes have collided on the runway at LAX. Millions in damages. Nobody hurt.

One being towed out of a hangar actually.
Some fucker can’t tell the difference between A380 and B767 painted in foot high letters against a line drawn on the ground.
Standby for the unions to start the push for all overseas maintenance to be carried out by ex-pat Aussies.

Yes, it is crisis time for unions, some in particular, (plus certain factional ALP political stooges) but it is the tactic of Abbott, not Joyce, the SPC or Holden admin or any business person doing this ( Honours to the Grocon family/people, though, for fighting hard– the only big ones I know of at this stage). By not going for the breaking of election promises (made after the numerous Work Choices scares) as many want him to do on industrial relations, he has merely had to stand firm – so far – against rent seeking employers and corporations, many of the old IRC mentality, and demand that businesses do everything they can to fix things before any taxpayer assistance. This often means attacking those ridiculous EBA’s and the unions are feeling the pain. How much more progress would there have been if they announced major legislative changes? Maybe not as much and in any case, zero unless they had the courage to stand up for such policies in the meantime.

So far, they are appealing politically and this is the key time for the policy which, quite rightly, seems to be “gutting the union movement and the ALP from the inside out” as has been said already. As long as the political blow-back is the same as that for the motor vehicles companies (and a typical Country Party favourite-son business doesn’t come up for this treatment) the policy might outlast the initial political blast from Labor and the unions.

But Joyce and the Qantas management over many years is equally liable…….

TWO Qantas passenger jets have collided with each other at Los Angeles International Airport, damaging both aircraft.

The wing tips of a superjumbo A380 and a Boeing 747 struck around 4:30pm AEST as the planes were being towed out of a hanger. No passengers were on board.

The damage was substantial enough to force the cancellation of flight QF94 to Melbourne and QF16 to Brisbane.

There will be suspicions as both aircraft were likely under the control of members of Steve Purvinas’s Australian Licenced Aircraft Engineers Association (ALAEA).
More from Nick Xenophon’s mouthpiece Ben Sandilands here.

Thanks Judith – I’ve said before that the tendency to want to offload blame onto management ignores the way the IR rules and the bloody-minded unions make them play the game. It’s a useful red herring while the unions are getting roasted.

Long time reader, first time poster. Qantas has made dreadful fleet purchasing decisions. Not having the 777 is a major fail. Admittedly, the 787 has been heavily delayed, but the 777 was a no brainer. The A380? Not convinced of its merits compared to the 777.These decisions were made before Joyce came onboard. He is somewhat stuck with the legacy. My wife spent 10 years working for Japan Airlines out of Bangkok as a cabin attendant. Qantas basically needs to offshore. Have cabin crew based out of Singapore, Bangkok, Hong Kong. Offshore as much work as possible.
Firstly, these cabin crew would cost less, but in my view would be super motivated and super keen. Great representatives of the airline. Reminds of a Qantas flight from Hong to Sydney. Crew on the way over looked like they wanted to belt someone. Large built, surly types that came through the boarding area like a herd of angry buffaloes. Sullen and aloof. On the way back, the crew were Hong Kong based. They were excellent. Friendly, charming and professional. Chalk and cheese.
You cannot charge a premium price for sub premium service. You will fail.

Long time reader, first time poster. Qantas has made dreadful fleet purchasing decisions. Not having the 777 is a major fail. Admittedly, the 787 has been heavily delayed, but the 777 was a no brainer.

Been saying this all day on the 5000 jobs thread, and getting ad hom abuse.
It will be interesting to see the reaction to this post.

Seeing that the unions have all the answers to Qantas’ woes, why doesn’t Joyce try handing over the running of the airline for 12 months to them?

Why not ban all other International Airlines from Australia for twelve months?
Force everyone into the clutches of the surly, unprofessional numpties at Quaintarse and make them pay 50% over the odds for the pleasure.
The public would burn QF HQ to the ground within three months.

I realise that the dodgem cars drivers at LAX were probably not local boys. But the relevant unions have extensive overseas affiliations, not to mention drinking and whoring buddies (never at the union (members’)'s expense, of course.

Why, all the ones who weren’t actually there were probably in church or visiting their mothers at the time.

Long time reader, first time poster. Qantas has made dreadful fleet purchasing decisions. Not having the 777 is a major fail. …… Qantas basically needs to offshore. Have cabin crew based out of Singapore, Bangkok, Hong Kong. Offshore as much work as possible.

(1) Opinions about the relative merits and drawbacks of various types and models are like arseholes – every has got one.
(2) Pray tell, how does Qantas “offshore as much work as possible” when the Qantas Sale Act binds them with guarantees of Australian employment?

Johanna, that’s possibly quite true, but that’s not the point you were presumably making when you said ‘whose jobs we are supposed to be protecting’. Irrespective of what happens in Australia with regards to IR laws and Qantas, we won’t be affecting the boys at LAX.

Nic, just a guess at this stage that Australian ALAEA members are posted to LAX oversee 12-16 hrs of daily line maintenance in connection with the engineers at QF USA partner American Airlines. I stand to be corrected and will attempt to verify in the next 24 hours.

That staggeringly stupid, syphilis addled, knobgobbling, drooling ol’ cretin the spudpeeler has a new sock puppet

No, Rabz, it’s just popular groupthink among the know-nothing knowalls outside Qantas who would have been able to achieve $1 million EBITDA at Qantas this year without even having to show up at the office the task is so easy. Cinch.

On the contrary, nic – my point is that these people work like an international cartel. Your slightly-better-than-average truckie could safely get a plane in and out of a hangar, but the people who do it in highly unionised places like at Qantas and whoever does it for them at LAX, are paid a motza, with much better conditions and perks than the truckie..

A truckie who banged the corner off another truck at that speed would be not only the permanent object of derision from their peers, they would be finding it difficult to get work in the future.

Yes, Gab. Engineering staff are authorised to oversee the ground movement of aircraft so more expensive pilots don’t have to be called in before they’re otherwise required to begin very long duty hours.

Qantas could frame their job cuts, pay freeze/cuts this way to the unions:
5,000 to go without negotiation
or
2,500 to go with the other 2,500 to stay subject to the whole workforce taking a 20% pay cut with the 20% saving issued as shares payable when Qantas becomes profitable again. Sort of like during the war where everyone bought war bonds.

All in this together stuff and all that. It would well and truly neutralise the unions.

I understand your scepticism, but that staggeringly stupid, syphilis addled, knobgobbling drooling ol’ cretin the spudpeeler regularly attempts to use sock puppets on the many blogs where is either banned or considered too fucking ridiculous to take seriously – i.e. every blog he’s appeared on, bar his own massively unread semen dominionesque sewer.

The fact that “Warwick Beattie” just so happened to post a comment on a different thread echoing almost exactly the rantings of the staggeringly stupid, syphilis addled, knobgobbling drooling ol’ cretin on another thread is indeed a giveaway.

And they are not engineers in the true sense of the word.
The best analogy is when they used to describe the knob-twiddler in a steam locomotive as an “engineer”.
A grandiose title for a certificate grade mechanic.

Yes, Gab. Engineering staff are authorised to oversee the ground movement of aircraft so more expensive pilots don’t have to be called in before they’re otherwise required to begin very long duty hours.

Yeah, flight engineers dont do it. But as to the tug operator and the guy from ground crew who sits in the cockpit when the plane is being towed , Im not sure how high up the technical field in terms of skills they are. What’s interesting about the crash is the guy in the cockpit has mike communication with the tug and is meant to hit the plane’s brakes etc when a problem occurs.

Excuse the length but Joyce and Qantas management have gotten off too lightly so far.

Qantas management (and board) not only allowed the EBA’s and working conditions to exist and thus were partners with the unions, at least until CEO Geoff Dickson started to make radical changes, but failed miserably to anticipate the coming major changes to their international business model. Not just foreign government-subsidised airlines, far from it, they were around then too. Qantas seemed like Fairfax with its Rivers of Gold advertising revenue that would never dry up. Assisted by Chris Corrigan plundering the Virgin cash reserves, its main competitor was on a knife edge domestically and any downturn in the industry would make it very vulnerable.

The lucrative Australia/USA duopoly was never going to end, it seemed, because even under Howard the threats to rural Qantas routes kept who I thought of as the Minister for Qantas John Anderson, ensuring that the Australian government would never waiver from maintaining that duopoly and keeping Singapore Airlines out of it. Virgin had no Business Class and as many public servants had business class seats built into their contracts, Virgin had no hope with that travel base at all and a virtual monopoly on the Canberra/Sydney or Melbourne routes.

All known to Joyce when he took over (he has been with various Australian airlines since 1996), but surely a competent management would have kept a close eye on the two big money-makers that allowed Qantas to be so generous with their unions? Especially when Virgin commenced business class and the clamour came from the USA for an Open Skies policy on international routes? Even as late as when USA/Europe became Open Skies some years ago? The rest of that is history, both money-spinners gone from the Qantas grasp and still unions run the business model. Aided by the Qantas Sale Act, yes, but nothing has really been done until now.

Today, of course, we heard what should be the final nail in the coffin for Joyce. Instead of the evil Virgin Airlines with its overseas owners crippling Qantas with its extra capacity which had to be “matched” by Qantas, we find that after the union war on Qantas in 2011, Qantas added nearly 3 times the capacity added by Virgin. Can that be interpreted in any other ay than to further cripple Virgin? If it was, then only when finally foiled by extra capital being thrown in by the owners of Virgin did Joyce call for government action. After his sob story months ago (and don’t forget that Joyce in at least one interview didn’t deny that a “Virgin Sale Act” in Qantas favour as an idea), can it ever be claimed that anything other than the Abbott government calling them on their ret-seeking led us to yesterday’s announcement?

“Long time reader, first time poster. Qantas has made dreadful fleet purchasing decisions. Not having the 777 is a major fail. Admittedly, the 787 has been heavily delayed, but the 777 was a no brainer. ”

Been saying this all day on the 5000 jobs thread, and getting ad hom abuse.
It will be interesting to see the reaction to this post.

Senator GALLACHER: You say that the international is down $200 million, and Senator Xenophon has asked for some explanations about your accounting processes. Your board member James Strong is on record as saying, ‘The historic success of Qantas as a carrier was getting the choice of it jets correct.’ Malaysia, Singapore, Etihad, Emirates and Cathay all operate 777s. Your 787 order is delayed and is not on the horizon, as I understand it. Reading the industry press tells me that the 777 is a 30 per cent more efficient plane than any you operate. Do you accept any of those assertions that are quite regularly made in the financial press about your business?

Mr Joyce : I think you have to go back into history, and I addressed this at the AGM. First of all, those fleet decisions were made a long time before I was CEO. They were made all the way back when James Strong was CEO. If I did have a problem with them I could actually declare that they are a problem and that is one of the reasons why Qantas has a problem, and I would—but I don’t.

Senator GALLACHER: So a 30 per cent more efficient aircraft is not a problem?

Mr Joyce : Let me explain why that is the right decision for Qantas. If you go back, every aircraft type—and every airline has to make decisions on what their critical missions are, what are the operations that are important for them, the length of services, the amount of volume, what we call the scheduling windows associated with them and the time slots they are available. Then the airlines look at each individual aircraft and ask which is better for them. Qantas has a unique operation, so some aircraft that work for other operators don’t necessarily work for Qantas. In 2000, when we made the decision to go with the A380s, as an example, there wasn’t a variant of the 777 that had the range to get Los Angeles or to do our critical missions—it didn’t exist. That aircraft came available so we committed to the A380s. That was the prime aircraft for our ultra long haul international operations. Then in 2003 the 777-300ER became available. That was an aircraft that did have the range. We had already committed to the A380s and we knew that on the drawing board there was a new aircraft that was going to be made available, which was the 787. The 787 is new technology and it leapfrogs the 777. It has absolutely better fuel efficiency than existing technology by 25 per cent, it gives us better economics than the 777 will and it provides us a range. So when the 787 became available we were one of the first airlines in to take a big order. Actually, Boeing and Airbus come to us to help design aircraft because they know we know our stuff. They actually know that we know the right aircraft to pick and how to pick it, so we got that aircraft designed to a lot of our spec.

Today we have this order of A380s, which per seat cost is actually lower than a 777-330ER. For the high-volume markets, like to LA, and the high-volume markets to London, where we do not have the ability to add extra frequencies, because they do not add any value, the A380 is the clear winner. To markets in Asia, where the 777 could be too big an aircraft, the 787 has lower fuel burn and better seat miles per trip—and it is significantly better per trip than a 777—so that is the better aircraft. The 787 actually gives us another advantage: it gives us an aircraft that we can use both internationally and domestically. The 777 does not. It is too big for domestic operations. So, while it was not my decision, Senator, I think it is absolutely the right decision for this company in terms of the fleet that we decided—and Qantas has some of the best people in the world who make these fleets decisions.

Senator GALLACHER: Absolutely, and that has been a long historical factor in the success of Qantas. The point I tried to make is that your competitors who are taking the 92 or 82 people out of Australia are operating more fuel-efficient aircraft that are flying now and the 787 has repeatedly been delayed and you will not have it for a couple of years.

Mr Joyce : We will not, but I think the wait will be worth while having because we will leapfrog those competitors. As I said, per seat mile cost, fuel is only one component. Per seat mile cost, the A380 is significantly better than the 777, and that is the aircraft we are primarily using on our international long-haul operations.

M Ryutin @ 9.49pm: agree with you about QF’s laziness and refusal to address its structural problems after AN’s demise in 2001 because it had been gifted virtually 100% of the corporate market when DJ decided not to contest that segment. However, when DJ moved into J class in 2011 it was DJ that was the aggressor not QF, as Joyce said yesterday:

Domestic capacity has also surged, with capacity growth of 18 per cent by the Virgin Group since July 2011, compared to eight per cent by the Qantas Group.

Borghetti knew exactly where the bodies were buried and went for the jugular. And his decision to game the ownership system required under the Air Navigation Act to backdoor the foreign ownership of his airline into Australia is the height of hypocrisy; he is attempting to play Canberra like a piano the way Geoff Dixon used to, but he’s not as good as Dixon and they’re a wake-up to him.

One core issue, actually the elephant in the room, is the Unions, too many of them and too many entitlements.

Judith Sloan nails it nicely

How is it that Qantas has to deal with some 20 unions and have more than 60 enterprise bargaining agreements? Why is it that some 45 per cent of workers are still on legacy arrangements – read, ridiculously generous pay and conditions – some 22 years after the company was privatised

Tom, I only went on figures supplied by Virgin today and I can’t remember now whether it was in the hundreds of thousands or more each, but the ration of increased capacity was 7 to 2 in favour of Qantas

Stick to what you know, you pig-ignorant old clown. You haven’t got a clue about why Qantas chose the 787. You’re just baaaing with the know-nothing sheep who think they know more on the subject that the Qantas engineering department. Did I say unteachably stupid? That may be an understatement. You are catatonically stupid.

Aircraft selection is an extremely complex process which includes range, capacity, crewing, turnaround times, maintenance costs and downtime through the life of the aircraft and, of course, the capital cost if the aircraft itself.
My go-to guy for an analysis of this is a supervisor of crayon-munchers from Toowoomba.

Aircraft selection is an extremely complex process which includes range, capacity, crewing, turnaround times, maintenance costs and downtime through the life of the aircraft and, of course, the capital cost if the aircraft itself.

Absolutely – and sometimes a range of other factors intrude which muddy the waters.
These factors include (small-p) political considerations, perceived marketing advantage, and simple failures of analysis.
There was also no plan B when problems emerged with the 787. Qantas’ is stuck with aircraft that use too much fuel and are comparatively maintenance heavy.

For M Ryutin — Bartholomeusz (an authoritative and reliable analyst on the subject) explains Borghetti’s cherry-picking of the domestic capacity stats to make Qantas look like the aggressor:

There is a lot of finger pointing and conflicting data being presented as to who’s to blame for the capacity increases. Borghetti points to Qantas’ capacity growth last financial year to argue that Qantas has added three times his capacity, while Qantas uses data over two years to show that Virgin has added more capacity, in absolute terms, over that period. However, the bottom line is that between them, they have turned a profitable duopoly into a loss-making sector.

Excuse my ignorance, but can someone describe what exactly the “legal requirement to dock the pay of the workers ” means?
Intuition tells me Qantas had to go through some kind of a court proceedings, but is that correct?
Thanks.

However, the bottom line is that between them, they have turned a profitable duopoly into a loss-making sector – sad, but very very true Tom. Ego and revenge are two of the reasons for where these two companies are, in addition to union irrationality and poor management at the top level. How long will these wounded souls survive?

I agree with Jeff Kennett’s comments to the effect that most of the detractors do not realise the costs of employing people with a myriad of red tape, union deals, and obligations. Sure Mr. Joyce and the Qantas board may have made mistakes – we all do- , but could they have done any better? I just cannot see Mr. Shelton or Mr. Shorten running an airline very successfully. Just think of the parking fees for cars at airports, planes are bigger and their fees are incredible.

Unions hate the 787, both in production and operation.
The 787 airframe is about 50% composite construction which is way higher than the 777. Of course, composites are heaps lighter than aluminium (and thus more fuel efficient).
Here’s the rub.
The use of composites means assembly is simpler – less holes drilled, less rivets inserted and less jobs.
That is why the Boeing unions hate the 787.
.
Why do Qantas unions hate the 787?
Simple.
Capacity is 50% greater than the 777, which means lower crew numbers per passenger carried.
That is, you could run two 787′s from Sydney to LA when the same capacity would require three 777′s and 50% more unionised crew.
Raw fuel consumption is the standard bleat from the unions because it strikes a chord with cognitively deficient lefties like spud-peeler.
The airline industry world wide measures costs by “seat mile” for a reason … it is an equalised measure of unit cost and matches their revenue earning unit (ie a seat).
The Qantas unions have cultivated a few dumb-arse Fairfax and Crikey “journos” to regurgitate this shit.
It doesn’t make it true.

Under the Fair Work Act, during industrial action, the employer can’t pay the employee and the employee can’t ask for or accept payment. I can’t remember which section. I had a client who got fined $20K for paying his bricklayers who had attended a funeral because the Union had called a strike for the funeral. He was going to give them the day off with pay anyway. Nothing could be done.

I wouldn’t discount those who maintain the avionics that actually fly the plane for the ‘front seat passengers’ behind the wheel…

(1) Loosen 4 wing nuts at back of black box;
(2) Remove 3 multi pin plugs from back of unit;
(3) Place new black box in position
(4) Insert 3 multi pin plugs (which are configured so they cannot be inserted in the wrong slot)
(5) tighten 4 wing nuts
(6) take original black box back to shop and attach it to diagnostic computer, which will tell you the part number of the new component to order from Seattle.

It’s winner-takes-all poker, Sabrina. For as long as Virgin was carrying only about 10% of Australia’s corporate air traffic — the case until DJ reconfigured its planes with business class in 2011 — it was a licence for QF to print money domestically. So the capacity war has not been irrational per se, just very destructive. Borghetti is using cheap money from his EY-SQ-NZ backers to stack up huge losses in order to buy business market share which is now above 20%, which will sustain the airline in the future. This is a very messy but unavoidable correction of the market following its massive distortion after the disappearance of Ansett in 2001 that removed the need for QF to fix its massive cost problems which it is now being forced to address.

Interesting to compare economy seat pitch for Qantas and say Malaysian and SAL.
Qantas is exclusively 31, even on the 380, whereas Malaysian is 34 on 777s and SAL is 34 or 32 also on 777s depending on -200 or -300 variant.
This is why I have always flown Malaysian or SAL when traveling north.
The other reason is fleet age.
With the exception of the 380, Malaysian and SAL have a much younger fleet.
Many Australians make pragmatic decisions about comfort as well as cost.
It’s the market, stupid……………..

Interesting to compare economy seat pitch for Qantas and say Malaysian and SAL.
Qantas is exclusively 31, even on the 380, whereas Malaysian is 34 on 777s and SAL is 34 or 32 also on 777s depending on -200 or -300 variant. …..
Many Australians make pragmatic decisions about comfort as well as cost.
It’s the market, stupid……………..

And the seat pitch on Qantas is solely designed to recover the costs which competitors don’t pay like $350k bus-driver salaries, massive salaries and make-up allowances for the trolley-dollies, five-star accommodation and exorbitant per-diems, heavily discounted seats for the relatives of the indolent employees, $80k baggage handlers …. and so it goes.

Private Latrine is now advising his extensive aviation clientele in Toowoomba to fly Asian airlines because they have younger fleets and are therefore inherently safer. LOL.

Did you know the spud-peeler, apart from being a fanboi for Uncle Ho, was an accomplished helo and F14 top gun pilot in Vietnam? True. He flew many hair-raising missions, but knocked back valour medals because he would have had to accept them from people who supported the Americans.

A couple of points if I may. Whichever way you want to cut it, on the 1st of March 2014, does Qantas have the right fleet mix? No they do not. They are stuck with a legacy fleet of 747-400s that are just too pricey to run. Right here, right now, would they love to be running 777′s? Yes indeed. Undoubtedly. The first 777-200ER was delivered to British Airways in early Feb, 1997. That’s 17 years ago, and it has very close to the range of the 777-300ER first delivered in 2003. ( Which, I might add was 11 years ago!). So, I believe Joyce was being disingenuous when saying a 777 model was not available at the time fleet decisions where made. And for Joyce to say their fleet mix is not an issue is being a tad dishonest. They have announced replacing their 747-400 aircraft on certain routes with a longer ranging twin aka Airbus A330. Joyce has effectively admitted they had the wrong type flying these routes.
Management made a mistake. Deal with it. Is it their main issue? No, of course their main issue is an uncompetitive workforce that costs too much. But, the aircraft mix employed by an airline is the key starting point, and management have to take the blame for getting that wrong.
The Qantas Sale Act must be repealed,( as I failed to make clear earlier) and Qantas freed from these operating restrictions. Qantas remains a good, if somewhat diminished, brand. If they can break the shackles of their highly unproductive workforce, use foreign crew when and where possible, then they have a future. If not, they will fall over. And so be it.

Why do Qantas unions hate the 787?
Simple.
Capacity is 50% greater than the 777, which means lower crew numbers per passenger carried.
That is, you could run two 787′s from Sydney to LA when the same capacity would require three 777′s and 50% more unionised crew.

Not intending to comment on any other aspect of the post or comments, but wherever you are sourcing your information from Leigh Lowe, you are breathtakingly mistaken.

The 787 has a much lower capacity than the 777. You can check Wikipedia for both the Boeing 777 and the Boeing 787.

The 777-200 models have a 3 class capacity of up to 314 (or 440 all-economy), while the larger 300 and 300ER can fit in up to 386 3 class, or 550(!) if fitted all economy.

However, the 787 ranges from 242 seats to 323 seats, in a 3 class layout, or 381 all economy in the 787-8 (smallest model) – note, no official all economy seat count is available for the 787-9 or 787-10.

Simple fact is that the 787 range are far smaller aircraft than the 777 range – plus with the new 777X in design phase, they are set to grow in capacity again!

Not happy with Wikipedia? Why don’t you check out Boeing’s official website pages for the 777 and the 787.

Oh and unless by crew members you meant pilots only, the minimum requirements for flight attendants are based on the seat count on the aircraft, so carrying the same amount of passengers will require roughly the same amount of flight attendants, regardless of how many aircraft.
Getting the basics wrong to such an extent tends to cast doubt on some of your other arguments.

Jethro, Leigh is very much mistaken as you suggest .I think he may have been comparing an A380 instead of a 787. A honest mistake. And I might add, the A380 performance is dependent on being full. If not fill, its performance against the 777 becomes severely compromised.

I think he may have been comparing an A380 instead of a 787. A honest mistake.

Not so sure, he makes reference to Boeing unions (who definitely are unhappy, the 787 is the first Boeing aircraft to outsource a large percentage of assembly) and the construction being 50% composite.

Qantas’ benevolent partner Emirates certainly doesn’t seem to think poorly of the 777 – they have over 120 of them, with firm orders for 210 more… How many 787s do they have on order? Zero.
Emirates’ fleet going forward will consist of the A350 (once the A330s and A340s retire), the A380 and the 777 exclusively.

The size and range of the 777-300ER make it essentially a straight swap for the 747-400, with 2 less engines to maintain and fuel savings of roughly 30%. Doesn’t take a mathematician like Alan Joyce to see why most other operators of the 747-400 have actively been replacing them.
Singapore phased out the last 747-400 in April 2012, Cathay Pacific and Air New Zealand will retire the last passenger variants in September this year, and Malaysian Airlines have retired all their passenger 747-400s with 2 freighters still in service.
All of these other airlines have replaced them with Boeing 777s, or a combination of 777s and A380s, with British Airlines not far behind. Maybe they’re all wrong.

The problem with Qantas’ fleet planning isn’t so much that they haven’t ordered the 777, it’s that there will be such a capacity gap between their future types. How does one grow a route to take the capacity of an A380 when all Qantas will have after the 747 retires will be the A330 or the 787s – which still have never been confirmed to actually get to Qantas rather than Jetstar?

I don’t respond to spuds anymore because he is a low mongrel dog who accused the RAN of moral equivalence with the My Lai massacre over some made up bullshit the ABC wasn’t prepared to defend, but I never realised how fucking stupid he makes himself and everyone else around him look with his unhinged, demented ranting…

Sinc…ban the lying, imbecilic fucker. It’s not a good look.

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